Article: 50174

Overview

Arizona Form 309 allows Arizona resident individuals, as well as certain nonresidents and part-year residents, to claim a nonrefundable state income tax credit for net income taxes paid to another state or a foreign country. This credit applies only to income that is subject to tax in both the other jurisdiction and Arizona.

Arizona residents may be eligible to claim a credit against Arizona income tax for net income taxes imposed by and paid to another state or foreign country, provided the following conditions are met:

• The income taxed by Arizona was derived from sources within another state or country and is subject to net income tax in that jurisdiction, regardless of the taxpayer’s state of residence.
• The other state or country does not allow a reciprocal credit for taxes imposed on income that is also taxed by Arizona.

Qualifying States

As an Arizona resident, nonresident returns filed with the following states generally qualify for the credit:

Alabama, Arkansas, Colorado, Connecticut, Delaware, District of Columbia (see note below), Georgia, Hawaii, Idaho, Illinois, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, Rhode Island, South Carolina, Utah, Vermont, West Virginia, and Wisconsin.

Non-Qualifying States

Nonresident returns filed with the following states do not qualify for the credit:

Alaska, California, Florida, Indiana, Nevada, New Hampshire, Oregon, South Dakota, Tennessee, Texas, Virginia, Washington, and Wyoming.

Arizona Part-Year Residents

For the portion of the year during which you were a resident of Arizona, please follow the instructions applicable to resident taxpayers. For the portion of the year during which you were a nonresident of Arizona, refer to the instructions provided for nonresident taxpayers.

Arizona Nonresidents

A credit against Arizona income tax may be available to nonresidents of Arizona who are not granted a reciprocal credit by their state or country of residence for taxes paid to Arizona, provided one of the following conditions is met:

• The other state or country does not impose tax on Arizona residents for income derived from sources within that jurisdiction; or
• The other state or country permits Arizona residents to claim a credit for taxes paid on income that is subject to tax in both Arizona and the other jurisdiction.

Arizona nonresidents who file resident returns with the following states qualify for the credit: California, Indiana, Oregon, and Virginia

Arizona nonresidents who file resident returns with the following states qualify for the PTE credit: California, Oregon, and Virginia

Reporting Form 309 – Credit for Taxes Paid to Another State or Country

To report Form 309 – Credit for Taxes Paid to Another State or Country, follow the steps below:

1. Go to the State taxes section.
2. Select I’d like to see the forms I’ve filled out or search for a form.
3. In the drop list, select Arizona.
4. Select the Credits tab.
5. Select 309 Taxes Paid to Another State/Country Credit to add and open the form.
6. Enter the state where taxes were paid and any other applicable data.
7. Click Save to apply changes.

Additional Information

Refer to the AZ Form 309 instructions for more information.